From: thepipeline_xyz
One of the most pressing real-world problems that crypto is poised to solve is the high cost and inefficiency of traditional payment systems [00:19:00]. The early thesis for crypto was to disrupt money, banking, and the financial industry, offering permissionless access and self-sovereignty in financial interactions [01:19:00], [01:24:00], [01:26:00].
Challenges with Traditional Payments
In the Western world, credit cards are extremely prevalent, but credit card companies levy significant fees from every transaction, often around 3% of the transferred cost [02:40:00], [02:42:00], [02:45:00]. This represents a substantial cost for businesses, both small and large, that must bear these fees [03:12:00], [03:14:00]. The combined market capitalization of Visa and Mastercard, estimated at a trillion dollars, highlights the immense scale of these charges, largely extracted from small and medium businesses [06:25:00], [06:28:00], [06:31:00].
Crypto as a Solution
Crypto provides a mechanism for individuals to pay for services directly using their phones, effectively bypassing these costly middlemen [03:40:00], [03:48:00]. This capability makes payments a “killer app” for crypto [04:16:00].
Global Impact
- Developed World: Crypto offers a clear path to disrupt the high fees associated with credit card transactions [03:19:00].
- Undeveloped World: In parts of the world where credit cards are less common, crypto is already widely used for payments, particularly Tether [03:54:00], [04:04:00], [04:09:00].
Enhancing Performance for Widespread Adoption
For crypto to truly compete with existing payment processing systems, it must be able to handle transactions at a comparable scale [04:22:00], [04:27:00]. Monad, for instance, is designed to be a network capable of achieving this, targeting 10,000 transactions per second (TPS) throughput [04:37:00], [04:38:00].
Impact on Personal Finance and DeFi
Beyond direct payments, crypto and decentralized finance (DeFi) hold significant potential for personal finance, encompassing banking, trading, borrowing, and lending [04:43:00], [04:51:00]. To deliver value, these systems need to offer an experience that is at least equal to, or ideally better than, centralized personal finance tools [05:07:00], [05:10:00], [05:13:00]. This involves:
- Reduced Slippage: Minimizing the difference between the expected price of a trade and the executed price [05:16:00]. The goal is to reduce slippage from the frequently seen 1-5% in DeFi to single-digit basis points [05:27:00], [05:35:00].
- Improved Cost of Execution: Making the cost of on-chain trading comparable to or better than centralized environments [05:16:00], [05:19:00].
Achieving these improvements requires a highly performant environment, enabling market makers to quote very tightly and reduce spreads, ultimately providing users with a much better execution experience [05:35:00], [05:37:00], [05:40:00].
Broader Settlement Applications
Beyond direct payments, the underlying blockchain technology also holds potential for general settlement processes across various transactions, such as stock trading or the transfer of assets like houses or cars [05:57:00], [05:59:00], [06:01:00], [06:03:00], [06:06:00].